Suppose the Correlation, R, Between Two Variables X and Y

question 14

Multiple Choice

Suppose the correlation, r, between two variables x and y is -0.44.What would you predict about a y value if the x value is 2 standard deviations above its mean?

• A)It will be .88 standard deviations below its mean.
• B)It will be .88 standard deviations above its mean.
• C)It will be 2 standard deviations below its mean.
• D)It will be .44 standard deviations below its mean.
• E)It will be .44 standard deviations above its mean.

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Definitions:

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, visible in GDP, real income, employment, industrial production, and wholesale-retail sales.

Inflation

The rate at which the aggregate price level for goods and services grows, weakening the purchasing strength.

Portfolio

An assortment of financial assets such as equities, debt securities, raw materials, liquid cash, and near-cash items, comprising both mutual funds and exchange-traded funds.

Expected Return

The predicted average of possible returns on an investment, weighted by the likelihood of each outcome.